Texas Home Equity Program Guide Fixed Rate

Transcription

1 Fixed Rate Wholesale Lending July 20, 2015 Table of Contents Texas Home Equity Program Guide... 1 Fixed Rate... 1 Program Overview... 2 Employee Loan Policy... 2 Credit Philosophy... 2 Ability to Repay and Qualified Mortgage... 2 Program Parameters... 2 Eligible Programs... 3 Ineligible Programs/Features... 3 LTV Matrices... 3 Document Providers... 3 Fees... 3 Policies Applicable on all Texas Home Equity Transactions... 4 General... 4 Program Restrictions... 4 Borrower Restrictions... 5 Power of Attorney... 5 Property Restrictions Day Cooling Off Period... 6 Secondary Financing... 6 Payoff of Debt... 6 Closing... 6 Texas Home Equity Program Guide - Wholesale Page 1 of 7 07/20/2015

2 Program Overview Texas Home Equity Program Guide This Program Guide provides an overview of the conventional products and policies eligible for delivery to for financing consideration. The details are based on the policies outlined in the Freddie Mac Single Family Seller/Servicer Guide ( Freddie Mac Seller Guide ) and/or the Fannie Mae Single Family Selling Guide ( Fannie Mae Seller Guide ). This document also identifies overlay restrictions specific to Pacific Union Financial. The guidelines within this document apply to all loans evaluated using LP or DU unless stated otherwise. Employee Loan Policy Loans to the originating Broker and/or their employees are allowed subject to Second Level Review and approval by a Credit Risk Underwriter. Credit Philosophy Ability to Repay and Qualified Mortgage Pacific Union is committed to complying with Ability-to-Repay and Qualified Mortgage rules (ATR/QM) by making a reasonable, good-faith determination that borrowers have a reasonable ability to repay the loan in accordance with the policies set forth within Fannie Mae and Freddie Mac guidelines. Factors considered in making this determination include the borrower s income, assets and employment status (if relied on) against the mortgage loan payment, ongoing expenses related to the mortgage loan or the subject property, payments on simultaneous loans secured by the subject property, other debt obligations, and alimony and child-support payments as required by Fannie Mae and Freddie Mac. A borrower s credit history is also considered in the evaluation and must comply with Fannie Mae and Freddie Mac policies. Pacific Union will utilize reasonably reliable third party sources of information. Program Parameters Texas Home Equity refers to financing provided in accordance with the requirements of Section 50 (a)( 6)of the Texas Constitution. Under Section 50 (a)( 6)of the Texas Constitution, a borrower may complete a cash out refinance using their primary residence as collateral. Once Texas Home Equity financing has been provided, all future refinance transactions must be treated as a Texas Home Equity even if the borrower is not receiving any cash out. Texas Home Equity loans are eligible for financing provided: The loan complies with all the policies outlined within this document. The broker must be properly licensed or registered in compliance with Texas regulations Loans must be closed in a Texas Title company s office. No mobile notaries are permitted. Texas Home Equity Program Guide - Wholesale Page 2 of 7 07/20/2015

3 Eligible Programs Texas Home Equity Program Guide Fannie Mae Program Fully Amortizing Fixed Rate Freddie Mac Program Fully Amortizing Fixed Rate DU Refi Plus Fully Amortizing Fixed Rate Freddie Mac Relief Refinance Open Access Specialty Fully Amortized Fixed Rate Ineligible Programs/Features LTV Matrices Conventional (Not eligible for loans with product codes beginning with CC. Loans must be coded and priced under the Fannie Mae or Freddie Mac program.) High Balance loans Government loans Jumbo loans Texas Home Equity Fully Amortizing Fixed Rate Occupancy Purpose Units LTV CLTV Credit Score DTI Ratio Reserves Primary Residence Rate/Term Cash Out 1 80% 80% Follow Fannie Mae, Freddie Mac, DU Refi Plus, or Relief Refinance-Open Access guidelines as applicable Document Providers All documents must be reviewed by McGlinchey Stafford and Youngblood & Associates. The Notice Concerning Equity Loan Extension of Credit must be provided to the borrower in the language spoken during the initial interview. To ensure the disclosure is provided to the borrower in the correct language, the loan officer must add a comment to the Loan Submission form identifying the language spoken. The processor must properly identify the language spoken when ordering documents. Fees Borrower paid fees are limited to 3% of the principal balance (including the origination fee). The following are not included in the 3% limitation: Closing costs paid with premium pricing Broker fees if taken out of Pacific Union Financial discount points or paid out of premium pricing; if fees paid other than out of Pacific Union Financial discount, Broker fees must be included in the fee cap. Per diem interest Discount points used to reduce the interest rate Escrow/impound funds Escrow waiver fees If borrowers are paying discount points, the borrowers, owners-in-title and/or spouse must execute the TX Home Equity Discount Point Acknowledgment. Texas Home Equity Program Guide - Wholesale Page 3 of 7 07/20/2015

4 Only fees which are allowed by State Law and RESPA/ECOA regulatory guidelines can be charged to the borrower and MUST be accurate and reflected on the GFE and the HUD-1. Only the following fees are allowed to be collected in the State of Texas: Origination Discount Credit Report Appraisal Administrative Fee Broker Fees Title Search fees Title Insurance Premium Fee T2, T42 and T42.1 Endorsement Fees Title Examination fee Survey Recording Fee Policies Applicable on all Texas Home Equity Transactions All Texas Home Equity transactions (regardless of program) must comply with the more restrictive of the base program guidelines or the Texas Home Equity guidelines outlined within this document. General An equity loan may not be refinanced more than once a year (>12 months). All loans must be run through DU or LP and receive an Approve/Eligible or Accept/Eligible recommendation. A full appraisal must be obtained regardless of DU or LP Findings. The lender, not DU or LP, is responsible for identifying a Texas Home Equity 50(a)(6). Program Restrictions Maximum LTV/CLTV is the lesser of 80% or the LTV/CLTV listed in the program-specific LTV Matrix Primary Residence only Fully Amortizing programs only None of the following: Interest Only Temporary Buydowns ARM loans Balloon loans Special Purpose Cash-Out Refinance loans High Balance loans Texas Home Equity Program Guide - Wholesale Page 4 of 7 07/20/2015

5 Borrower Restrictions Texas Home Equity Program Guide A married borrower cannot create a lien against the property unless his/her spouse consents to the lien by signing all applicable program and closing disclosures and documents. An owner-in-title (whether a spouse or individual) must sign the application and Texas Home Equity Notice (English) or Texas Home Equity Notice (Spanish) notice at the time of application, along with all appropriate documentation. Ineligible Borrowers include: Co-Signer(s) Non-Occupant Co Borrowers Foreign Nationals Trusts Power of Attorney Not allowed Property Restrictions 1 unit dwellings only Maximum 10 acres Survey required to: Confirm lot size Evidence homestead property and any adjacent land are separate Evidence homestead and property is a separately platted and subdivided lot for which full ingress and egress is available Properties must be served by municipal utilities, fire and police protection Homestead must be separate parcel within permissible acreage The following property types are not eligible: 2-4 unit dwellings Properties zoned or designated commercial Properties designated or zoned as agricultural (including properties used primarily for milk production) Resale Restricted properties Mixed Use properties On-Frame modular homes built on a steel undercarriage Working farms and ranches Escrow holdbacks are not allowed. Rural Property will be considered on an exception basis. A property that DOES NOT meet the following guidelines is considered to be rural: Dwelling must be located within the limits of a municipality or its extraterritorial jurisdiction or a platted subdivision, and Served by at least 3 of the following public utilities: Electric Natural Gas Sewer Storm Sewer Texas Home Equity Program Guide - Wholesale Page 5 of 7 07/20/2015

6 Water 12-Day Cooling Off Period Loan may not be closed until at least 12 calendar days after the borrower has dated and signed the initial application and Notice Concerning Equity Loan Extension of Credit. Econsent signatures are acceptable The "cooling off" period in which the borrowers, owners-in-title, and/or spouse (including non-borrowing spouse) can change his/her mind about the Texas Home Equity first mortgage runs from the later of: The date the initial loan application is signed, or The date that the Notice Concerning Equity Loan Extension of Credit is signed and dated by the borrowers, owners-in-title, and/or spouse. Secondary Financing New subordinate financing is not allowed. Existing subordinate financing may remain in place subject to the following: Second lien must re-subordinated. Maximum 80% CLTV. Second Lien may not be a HELOC. Payoff of Debt Closing may require the payoff of the existing first lien as part of the loan approval. However: may not require any other lender-owned debt be paid off as part of the transaction as a condition of loan approval. Loan approval may require the payoff of non-lender owned debt if necessary for qualifying purposes. Title A title insurance policy written on Texas Land Title Association forms (standard or short) including T42 and T42.1 endorsements is required. For self-employed borrowers operating a business from the homestead property, the title company must issue a T42.1 endorsement without exception or deletion. Title may not include language that: excludes coverage for a title defect that arises because financed origination expenses are held not to be reasonable costs necessary to refinance or defines the reasonable costs necessary to refinance requirement as a consumer credit protection law since the standard title policy excludes coverage when lien validity is questioned due to a failure to comply with consumer credit protection laws. Final HUD-1 and final loan application Texas Home Equity Program Guide - Wholesale Page 6 of 7 07/20/2015

7 The final HUD-1 and a copy of the final loan application must be delivered to/accepted by the borrower(s) during normal business hours. Closing may occur the business day after the receipt of the final HUD-1 and a copy of the final loan application. If any changes are made to the HUD-1 or final loan application, the borrower(s) must close the business day after the receipt of the revised documents: Weekends and state federal holidays are not considered business days Examples of required time periods are: HUD-1 and final loan application delivered to/accepted by the borrower(s) on Tuesday, loan can close on Wednesday; or HUD-1 and final loan application delivered to/accepted by the borrower(s) on Friday, loan can close on Monday If the final HUD-1 and copy of the final loan application are not provided to the borrower(s) on the same day, the loan must close the business day after the latest date that the borrower(s) receives the final HUD-1 or copy of the final loan application. Borrower must sign the Acknowledgment of Itemization of Fees, Points, Interest, Costs and Charges for Texas Home Equity Loan or Line of Credit to evidence their receipt of the final HUD-1 and loan application at least one day prior to closing. Federal Notice of Right to Cancel and Texas Home Equity/Texas HELOC Notice of Right to Rescind must be signed by all borrowers, owners-in-title, and/or spouse (including non-borrowing spouse) The following additional Texas Home Equity Specific documents must be included in the closing package: Acknowledgement of Fair Market Value signed by lender and borrower Texas Home Equity Security Instrument (form ) Texas Home Equity Note (Fannie form 3044) Texas Home Equity Affidavit and Agreement (Form 3185) Texas Home Equity Condo Rider (form ), if condo Texas Home Equity PUD Rider, (form ), if PUD Texas Home Equity Certificate from Originating s Regarding Compliance with Section 50(a)(6) Article XVI of the Texas Constitution signed by the Seller s Attorney If borrower owns more than one dwelling, loan file must include an Affidavit of Non-Homestead for all other dwellings. Escrow waivers are allowed. The escrow waiver fee is a loan level price adjustment (LLPA) and is NOT included in the 3% fee limit. Loans must be closed in a Texas title office. No mobile notaries. Texas Home Equity Program Guide - Wholesale Page 7 of 7 07/20/2015